What is a mortgage?

What is a mortgage?

What is a mortgage loan?

Simply defined: A mortgage loan is used to purchase or maintain a home, land, or other types of real estate. A mortgage can also be used to refinance a property you may already own. The property then serves as collateral to secure the loan.

Who typically gets a mortgage?

Most homeowners have a mortgage loan. Very few of us have the option of paying cash for a home. A mortgage loan enables a buyer to put a minimum amount down (or greater) at closing. Mortgage loans have allowed many to realize their dreams of homeownership. If you are already a homeowner, a mortgage loan refinance will allow you to access the equity in the home to possibly lower your monthly payments or take cash out to help cover some of life’s expenses. For example, home repairs, college tuition, etc.

How does a mortgage loan work?

After working with your loan officer, a down payment amount is determined for you to bring to closing. The remaining money owed to the seller is funded by the mortgage loan. As the borrower, you agree to pay the lender this amount over time in addition to interest on the loan. A mortgage loan payment is typically made in a series of regular payments that include principal and interest. A portion of property taxes, homeowners insurance, and monthly mortgage insurance may also be included in the payment. Once the lender is paid in full, the mortgage lien will be released from your title.

You will own the home free and clear of any debt at that time.